Obama: Budget shrinks deficits and expands economy

WASHINGTON—President Barack Obama says his proposed $3.77 trillion budget for 2014 can shrink federal deficits and expand the U.S. economy. He says: "We can do both."

Obama spoke at the White House Wednesday as his administration issued his budget proposal. It would replace $1.2 trillion in automatic spending cuts scheduled to take effect over the next 10 years with $1.8 trillion in deficit-reduction measures. His plan calls for reductions in Social Security and Medicare spending and increases in taxes, mostly on the wealthy.

He says: "It replaces these cuts with smarter ones."

Obama also would increase cigarette taxes by 94 cents a pack to pay for expanded preschool programs. He also calls for $50 billion in public works spending.